Tuesday, January 28, 2003
Publishers Reach Settlement With Justice Department
By DON PARRET, Staff Writer
Alternative-weekly newspaper chains Village Voice Media and New Times Media, accused of dividing markets when they sold competing papers to each other in Los Angeles and Cleveland, have tentatively settled allegations of antitrust violations and unfair competition with the Justice Department.
Without admission of guilt, each company agreed Saturday to a consent decree, under which it would assist in the opening of new weekly papers in Los Angeles and Cleveland by selling assets, including the rights to the names of the closed newspapers—New Times Los Angeles and The Cleveland Free Times.
The agreement also would free advertisers from contracts they signed with remaining papers in those cities and bar the companies from entering into any similar agreements in the future.
Village Voice Media, owner of LA Weekly, and New Times Media also would pay $610,000 in civil penalties and $140,000 in attorneys fees to the State of California. Both papers would pay a much smaller amount to the State of Ohio.
In a lawsuit filed with the proposed settlement in U.S. District Court for the Northern District of Ohio, the Justice Department charged that the sales of the two papers violated Section 1 of the Sherman Act, which prohibits contracts or mergers that limit competition.
The consent decree also includes a provision that if sales of the papers are not made in 30 days, a trustee will be appointed to oversee each purchase.
In October, 13-paper chain New Times Media agreed to close New Times Los Angeles, a weekly paper that competed with Village Voice Media’s LA Weekly. Village Voice, with six publications, at the same time agreed to shut down The Cleveland Free Times, which shared a market with New Times Media’s Cleveland Scene.
With the deal, New Times Media reportedly received $11 million from Village Voice for its Los Angeles newspaper, while Village Voice Media was paid $2 million for its Cleveland newspaper.
Both papers are privately owned.
The Justice Department called the agreement illegal because it eliminated competition that had brought businesses in both cities cheaper advertising rates and more promotional opportunities and benefited readers with a higher quality newspaper.
Calls to Denver-based New Times Media and New York’s Village Voice Media were not immediately returned yesterday.
Los Angeles Times reporter Tim Rutten, who covers media for the newspaper and has been following the case, said that the competitive nature of publishing made federal, state and local officials move quickly on the case.
“I think that what had prosecutors, the feds and the district attorney moving at unprecedented speed was their thinking that if there was going to be a remedy, they would have to move fast before the body got cold,” Rutten said. “With each passing month, lists of advertising contacts would become worth less.”
Part of the Justice Department case, Rutten said, focused on ad rates.
“Various people said that before the New Times entered into the Los Angeles market, LA Weekly was in the habit of annual increases, but when the New Times moved in that stopped.”
Mark Haefele, who was an LA Weekly columnist for 14 years, said federal investigators were curious about Village Voice Media’s company culture.
“It was hard for the company to escape their own problems,” Haefele said. “[Village Voice Media] has always thought of it as in the backwoods, where they didn’t have to play by big-boy rules.”
Rutten and Haefele both said that at the top of their short lists, they expect Richard Riordan’s media venture —Los Angeles Examiner—to enter the market where the New Times left off.
The former mayor has said he hopes to begin publishing June 5 with a weekly tabloid.
Ken Layne, who is involved with the paper’s launch and operates laexaminer.com, a local news digest, said yesterday’s consent decree may help Los Angeles Examiner.
“This certainly is not going to hurt us,” Layne remarked.
Copyright 2003, Metropolitan News Company